Are You Going to Lose Your Employer-Provided Health Insurance Coverage?

Many Americans who buy their own health insurance policies have already begun getting notices of rate increases ranging upward to 30% on private policies. Others who purchased child-only policies because their employers didn’t provide them are learning that that type of coverage is being canceled by some carriers. But these people represent a small percentage of America’s health insurance consumers. Most Americans, about 150 million workers and their families, currently have employer-provided insurance. While they remain the majority, the ranks of Americans with employer-provided health care has been steadily declining as the cost of providing it has escalated. In 2000, 68.4% had the coverage; by 2009 it had shrunk from to 59%, according to the not-for-profit Employee Benefit Research Institute (EBRI). EBRI also credits the shrinkage to job losses due to the recession.

While employer-provided health care isn’t likely to completely disappear anytime in the near future, at least if you work for a large corporation, employees of smaller firms where wages are low may see their coverage dropped, according to a May 17, 2010 report in the Wall Street Journal.

What is more likely is that you will be asked to chip in a larger portion of the premium. A recent Kaiser Family Foundation survey claimed that workers were asked to take on significantly more of their health care insurance cost in 2010 than in 2009. In fact, the survey said, employees were paying an average of $4,000 toward a average $13,770 family coverage plan, a year-over-year increase to the employees of 14%. The survey also found that in addition to passing their premium hikes along to their employees, many recession-spooked employers were switching to policies with higher deductibles and copayments, and, where allowed by law, dropping some of benefits perceived as frills or non-essential.

Some employers are considering the option of dropping the employer-provided health care coverage perk altogether, weighing it against new penalties that are scheduled to begin in 2014 as a result of health care reform. When that portion of the law takes effect, employers with more than 50 full-time workers who don’t offer health insurance coverage will be fined $2,000 per worker. (Note that there are a whole bunch of what-if, wherefore and other government legalese provisos attached to that fine.) While many health-care experts think it’s unlikely an employer would drop coverage just to save money, it’s hard to say what any business will do three years from now given the current unpredictable economic climate. For the time-being, although you may be asked to foot a bigger portion of the bill for it, it appears that most employer-provided health care plans won’t be dropped.